- Standard and Poor’s (S&P) today affirmed Defence Bank Limited credit rating as BBB | Stable | A2 – one of the highest S&P ratings assigned to only a select few Mutual Banks in Australia.
- In their report, S&P noted Defence Bank’s low-risk residential mortgage book supported by stable employment and repayment prospects for active Australian Defence Force (ADF) personnel in times of economic stress.
- S&P ratings reflect Defence Bank’s very strong capitalisation, and well-established reputation, built on an ongoing commitment to its tight common bond.
- S&P believe Defence Bank’s core ADF customer segment provides an essential service, ensuring stable employment prospects compared with the overall Australian population translating into through-the-cycle earnings resilience and stability.
- S&P believe Defence Bank has sufficient liquidity to manage more than six months of market stress without a material dependence on central bank support.
Defence Bank today welcomed Standard and Poors’ decision to maintain its BBB | Stable | A2 rating, underlining the strength, safety and security of banking with Defence Bank.
Defence Bank CEO David Marshall said:
“Today’s announcement from S&P is an endorsement for our bank, our dedicated people and very importantly, our loyal members.
“Over the last 12 months, we achieved an increase in profit, improved asset growth by 2.5 times greater than system, increased deposit holdings, welcomed 4,500 new members and delivered record investment in our products and member service.
“Defence Bank is extremely well positioned to withstand the current challenges and today’s announcement from S&P is significant tangible evidence of that. The S&P report considers that if Australia is to experience a protracted period of deteriorating economic conditions, Defence Bank's credit loss and nonperforming asset experience would outperform peers' to a greater degree than they have in the past five years.
“We are deeply committed to our members and are supporting them and here for them. At a time of crisis for the nation, more than ever Defence Bank will live up to its commitment of ‘serving those who protect us’.”
Defence Bank today highlighted the strength of its member owned business including:
- All deposits with Defence Bank are covered by the Government Deposit Guarantee of $250,000 per person
- Defence Bank is an Authorised Deposit-taking institution (ADI), regulated by APRA
- A very strong loan book due to prudent lending practices and support and encouragement of its members, with the majority of Members significantly ahead of their scheduled repayments.
- The vast majority of our members are Australian Government employees with secure long term employment. Loan repayments will continue to be made.
- No exposure to small and medium enterprise (SME) lending.
- Defence Bank delivered Net Profit after Tax (NPAT) for FY 18/19 of $10.04m - a profit improvement of 2.5%.
“Defence Bank has wonderful members across our great country, providing an essential service, who we will continue to support in partnership.
“Our branches, mobile banking app, contact centre and online banking are fully available and accessible along with a designated member care area for anyone experiencing financial hardship.
“The Defence Bank team will do everything we can to position our bank and our Members for the recovery that will follow the crisis.
“While today’s S&P announcement is acknowledgement of tremendous hard work from our team, we remain deeply honoured to serve those who protect us, which will be our ongoing commitment, even more so in times of crisis.”